The GOP Wants to Pass Trump’s Tax Cuts This Week. Here’s What They Need to Do.

With President Trump generating new controversies on a daily (sometimes even hourly) basis, it’s easy to lose track of the fact that he’s simultaneously promoting a tax “reform” plan that amounts to giving the rich a huge tax cut. If you get your news directly from the president’s Twitter feed, this process is going swimmingly:

The Tax Cut Bill is coming along very well, great support. With just a few changes, some mathematical, the middle class and job producers can get even more in actual dollars and savings and the pass through provision becomes simpler and really works well!

Many actual news outlets agree that there’s a decent chance congressional Republicans will put tax-reform legislation on President Trump’s desk. But what Trump refers to as making “just a few changes” is a complex and precarious process that still result in legislation that is most beneficial to corporations and the wealthy.

What the Legislation Would Do

In general, the bill offers tax cuts for businesses and rich people; it even contains specific perks for golf-course-owners, private-jet-owners, and people who send their children to private school. The nonpartisan Tax Policy Center estimates:

In 2019, those making less than $25,000 would get an average $50 tax reduction, or 0.3 percent of their after-tax income. Middle-income earners would get average cuts of $850, while people making at least $746,000 would get average cuts of $34,000, or 2.2 percent of income.

The Senate plan cuts the corporate tax rate from 35 to 20 percent, adjusts the rates on individual tax brackets, nearly doubles the standard deduction, eliminates personal exemptions, and mildly increases the child tax credit, while also making it more accessible to rich people.

This would mean that the government would pull in $1.5 trillion less in taxes over the next decade. To help pay for the tax cuts, the Senate bill repeals Obamacare’s individual mandate. The Congressional Budget Office says that would save the government $338 billion over the next decade, but lead to 13 million fewer people having health insurance. The plan would also save $1.3 trillion over the next decade by repealing the state and local tax deduction, which would hit high-tax states like New York, California, and New Jersey particularly hard.

The corporate tax cut would be permanent, but most individual cuts would expire in 2025 to comply with Senate rules banning legislation from increasing the deficit after a decade. If the tax cuts aren’t extended, in 2026 taxes will increase for pretty much everyone.

Where We Are Now

The House passed its tax-overhaul bill on November 16; it had been unveiled two weeks earlier, and no hearings were held on the legislation. The vote was 227 to 205, with opposition from all Democrats and 13 Republicans — most of whom are from New York, New Jersey, or California.

Now Senate Republicans are looking to hold a vote on their version of the bill by the end of the week.

Getting the Bill to the Senate Floor

Republicans may not have the 50 votes they need to pass their tax bill out of the Senate. But before they can even address that issue, they have to get the bill out of committee.

Two Republican senators, Bob Corker and Ron Johnson, added a new hurdle on Monday when they threatened to vote against the bill in the Senate Budget Committee on Tuesday afternoon if their concerns aren’t addressed. There are 12 Republicans and 11 Democrats on the committee, so the GOP can’t afford a single defection.

Fixing the bill may be tricky, as Corker and Johnson have different concerns. Corker, like several other deficit hawks, is now calling for a “backstop” that would have tax rates rise if the cuts fail to spark explosive economic growth to pay for the plan’s $1.5 trillion in deficit spending over the next decade. (Despite what many Republicans claim, independent experts say the tax cuts will not magically pay for themselves.)

“I’m not exactly sure what’s going to happen in committee. We’re working diligently to fix the problem,” Johnson told Wisconsin reporters on Monday. “If we develop a fix prior to committee, I’ll probably support it, but if we don’t, I’ll vote against it.”

Passing the Bill in the Senate

If Corker and Johnson allow the bill to pass out of the Senate Budget Committee, then majority leader Mitch McConnell can bring the bill up on the floor. That kicks off 20 hours of debate and a “vote-a-rama.” This process, which allows any senator to offer amendment on the bill, could drag on for some time. Senate majority whip John Cornyn called it a “dynamic process” and indicated that there will be changes to the bill in the coming days; he said there will be “manager’s amendments at different points along the way.”

During this uncertain process, GOP leaders need to find a way to get almost every Republican senator on board. They can afford to lose only two votes, and nine Republicans have suggested they might not back the bill. These are their demands:

Ron Johnson and Steve Daines: These are the only two senators who officially oppose the tax bill in its current form. Like Johnson, Daines wants a more generous deal for “pass-through” businesses. A Daines aide said he just wants to “ensure Main Street businesses are not put at a competitive disadvantage against large corporations.”

Under both the House and Senate versions of the bill, the corporate tax rate would be cut from 35 to 20 percent. But most privately owned companies are organized as pass-throughs, with the profits going to their owners, who are taxed at the individual rate of up to 39.6 percent. While the House bill cuts the pass-through rate to 25 percent, the Senate version creates a 17.4 percent income-tax deduction instead of establishing any special rate.

This change actually makes the Senate bill better for genuinely small businesses than the House version was: Right now, the vast majority of small business owners pay 25 percent or less on their (modest) business income. So, for them, a large tax deduction is worth way more than a ten-point cut in the top rate.

The Senate bill is less advantageous for wealthy pass-through business owners such as Senator Johnson, who owns part of a plastics company structured as a pass-through business.

Some have suggested raising the tax deduction for pass-throughs from 17.4 to 20 percent to appease the senators, and Johnson floated another idea on Monday: not allowing corporations to deduct state and local taxes, which he estimated would raise between $100 billion and $200 billion.

“Let’s treat all businesses equal when it comes to state and local tax deductions. We’re disallowing it for individuals, we’re disallowing for pass-throughs, we should disallow it for C corps,” Johnson said.

Bob Corker, Jeff Flake, James Lankford, and John McCain: The GOP can’t deliver its tax cut to wealthy people and corporations without driving up the deficit. But a handful of Republican senators remember that their party spent the past eight years complaining about the national debt, and they’re rightly worried that Congress will extend the pricey cuts set to expire after 2025, rather than raising everyone’s taxes.

“The savings, the score — it just isn’t valid because you know that they’re not going to follow through,” said Senator Flake. “You can’t assume that we’ll grow a backbone later. If we can’t do it now, then it’s tough to do it later.”

The deficit hawks may be the hardest group to placate, since their qualms get at the heart of the GOP’s lies about who the bill benefits and how it’s being paid for. They may be willing to accept Lankford’s proposal to insert a “backstop” to raise taxes if the cuts don’t produce the economic growth that’s been promised, though it doesn’t make any sense in the real world. The Tax Policy Center estimates that economic growth from the tax cuts will generate $169 billion in additional revenue — not over a trillion, as has been claimed — and it’s hard to imagine Congress having the “backbone” to raise taxes when the next recession hits.

Susan Collins and Jerry Moran: Both senators have voiced opposition to a number of items in the tax bill, most notably the repeal of the Obamacare mandate. Moran said he “encouraged the leadership” to separate health care from taxes, and Collins — one of three GOP senators who killed Obamacare “skinny repeal” — said she’s worried about skyrocketing health-care costs.

“The fact is that if you do pull this piece of the Affordable Care Act out, for some middle-income families the increased premium is going to cancel out the tax cut that they would get,” she said.

It looks like the Obamacare-mandate repeal is staying in the bill, but GOP leaders are hoping they can offer Collins something else: reducing the impact of scrapping the state and local tax deduction. The property tax deduction was put back into the House bill, and Collins would like to see the same thing in the Senate bill. This could potentially be funded by taking state and local tax deductions from corporations, as Johnson suggested.

It’s unclear what it will take to win Moran’s vote. He’s also voiced concerns about increasing the deficit and the tax burden on graduate students. “I will do everything I can to make sure that provision is not in there,” he said over the weekend. “Then I’ll make a decision about the overall tax bill, whether it’s a good thing or a bad thing.”

Lisa Murkowski: Though Murkowski stopped the Obamacare repeal effort this summer, she announced last week that she’s fine with ending the individual mandate. She still hasn’t committed to supporting the tax bill, but GOP leaders are hoping they can win her over by combining the tax plan with a bill to open up Alaska’s Arctic National Wildlife Refuge to oil and gas drilling.

What Happens If the Senate Bill Passes This Week

If the Senate GOP manages to get all of its members in line in the next few days, they’ll hand President Trump his first major legislative victory — but the process won’t be over.

The House and Senate tax bills differ in many ways. Most significantly, the House bill does not include a repeal of the Obamacare mandate. While House Republicans would face pressure to pass the Senate version of the bill, Senator Rob Portman said he “fully expects” that there will be a conference to resolve differences between the legislation. However, on Monday, White House officials said they hope that the differences can be addressed informally, without going to a potentially lengthy conference.

When asked, following a lunch with Trump on Monday, if he thought the tax bill could be on the president’s desk by Christmas, Senate Finance Committee chairman Orrin Hatch said, “I hope so.”

What Happens If the Senate Bill Doesn’t Pass

Technically, Republicans could spend months working on their tax-reform plan, but they don’t feel they have that kind of time: Next week they have to turn their attention to avoiding a government shutdown and a number of other issues they pushed off until the end of the year. Plus, next Tuesday’s special election in Alabama could narrow the GOP Senate margin by one, no matter who wins. Republican Roy Moore has wacky ideas about taxes and isn’t looking to do McConnell any favors.

Republicans see this week’s vote as do-or-die, as they’ve been telling themselves for months that passing it is key to their success in the midterms (though polls show Americans don’t like the plan and don’t consider tax reform a top priority).

“I think all of us realize that if we fail on taxes, that’s the end of the Republican Party’s governing majority in 2018,” Senator Lindsey Graham said on “The Brian Kilmeade Show” in October. Graham predicted that if the legislation failed, his party would lose the House, take a hit in the Senate, and Trump would face impeachment.

“So it’s important that we pass tax reform in a meaningful way,” he said. “If we don’t, that’s probably the end of the Republican Party as we know it.”

The Pentagon is set to begin a drawdown of its 5,800 troops from the Southwest border as early as this week, the Army commander overseeing the mission told POLITICO today — even as the approaching caravan of refugees prompted U.S. customs officers to close a port of entry near Tijuana, Mexico.

All the active-duty troops that President Donald Trump ordered sent to the border before the midterm elections should be home by Christmas, said Army Lt. Gen. Jeffrey Buchanan, who is running the mission from San Antonio, Texas.

A shooting at a Chicago hospital has wounded multiple people, including a suspect and a police officer, authorities said.

Shots were fired Monday afternoon at Mercy Hospital on the city’s South Side, and officers were searching the facility. Police issued a statement on Twitter saying there were “reports of multiple victims.”

A witness named James Gray told Chicago television station ABC 7 that he saw multiple people shot: “It looked like he was turning and shooting people at random.”

From @presssec: new rules for reporters at WH press conferences.- one question per reporter, then yield floor and microphone.- followup question “may be permitted.” Then yield floor and microphone.- “failure to abide” may result in suspension/revocation” of WH press pass.

so, the conventional wisdom on election night was that democrats had not achieved the resounding repudiation of president trump they were looking for. yes, they’d won the house, but not overwhelmingly. and progressive favorites stacey abrams, andrew gillum, and beto o’rourke had gone down to defeat. meanwhile, republicans had made slight gains in the senate. a few days later, the thinking shifted in Democrats’ favor, as more late-breaking results came in from various states, especially california, which is notoriously slow at counting ballots, and where the party did extremely well. we’re not almost two weeks out from the election, enough time to look at things more dispassionately. how do you rate the performance now?

Trying to get away from the endless and interminable and redundant arguments over how to define a “wave.”

Benjamin Hart3:10 PM

yes, I agree, there is little more tedious than parsing what defines a wave

Ed Kilgore3:11 PM

Democrats won the House popular vote and picked up 37 or 38 seats. Dems won 22 of 34 Senate races (with one in Mississippi still to go), and by just about any measure, more Senate votes. And they picked up seven net governorship and seven state legislative chambers.

Part of the problem is that an insanely pro-GOP Senate landscape made a good Democratic performance look bad.

And the other problem was sky-high Democratic expectations, plus the overwhelming attention given to close races in Florida, Georgia and Texas.

Which all went Republican.

Benjamin Hart3:13 PM

yes, and the pressure to prematurely label the evening one way or another, which is endemic to election coverage (and which I don’t see going away any time soon)

the other thing, I think, is that trump is such an outlier of a person and president that some people view anything less than a sweeping rejection the likes of which we’ve never seen before as a bit of a letdown

Ed Kilgore3:14 PM

Yeah, the commentariat has not adjusted well to the slow counts that ever-increasing voting-by-mail plus provisional ballots have introduced.

As for Trump, I guess part of the polarization over him is that it’s hard for partisans to interpret anything that happens as anything other than total victory or defeat for MAGA. And the MSM tends to respond with quick judgments of a “split decision,” which is very misleading.

Benjamin Hart3:20 PM

yep. haven’t seen TOO much of that since the election, to be fair. but back to the actual gains made by dems, which it’s easy to lose track of amid the hundreds of results. what do you think was their most important victory other than winning the House? for me, it might have been knocking off scott walker in wisconsin.

Ed Kilgore3:23 PM

Guess it depends on your interpretation of “important.” If you mean “soul-satisfying for progressives,” then yeah, finally taking down the guy who had most consistently applied the worst kind of conservative policies to a previously progressive state was a very big deal.

Sweeping Orange County, California’s congressional seats was another big deal emotionally, particularly for those of us old enough to remember O.C. as a John Birch Society hotbed.

From a more practical point of view, all those congressional wins mattered–first, as part of a House takeover, and second, as a foundation for (maybe) a Dem reconquest of the Senate in 2020.

And the gubernatorial and state legislative gains will help with the next round of redistricting, though there’s some unfinished business on that front in 2020.

As I’ve argued at some length, even some losses were important for Dems–particularly the Florida and Georgia gubernatorial elections and the Texas Senate race. They showed that finally “national Democrats” (including African-Americans) can do better in the former Confederacy than Blue Dogs–at least in states with the requisite combination of a large minority vote and some upscale suburbs.

Benjamin Hart3:29 PM

yes, and that may also have big repercussion in terms of what kind of candidate democrats want to nominate in 2020

Ed Kilgore3:30 PM

Well, it certainly reinforces the idea that there’s a “sunbelt strategy” for 2020 that could work as an alternative to Democrats obsessing about the Rust Belt states Trump carried.

Benjamin Hart3:31 PM

right – arizona and georgia really could be in play

and, of course, florida

Ed Kilgore3:31 PM

And North Carolina.

Benjamin Hart3:31 PM

right.

so, all in all, a democratic party that is somewhat addicted to being traumatized should be feeling pretty good

Ed Kilgore3:35 PM

Yeah. There were some painful near-misses, but not really much grounds for a struggle-for-the-soul-of-the-party thing. That’s good, since Democrats will need all their energy to winnow their 40-candidate presidential field.

A Florida elections expert digs into what went wrong for Democrats on Tuesday

This election was the third consecutive Governor’s race decided by a point or less, bracketing two consecutive Presidential elections decided by a point. This drives homes two points: One, Florida, for all its dynamic growth and demographic changes, is very stable; and Two, when organizations like Quinnipiac try to peddle off polls showing candidates in Florida with 6-point leads, or 9-point leads, you now know what to do with that information (a post/rant on public polling is coming soon).

There are a lot of reasons why Florida is very competitive…but it is what it is. Big chunks of Florida cancel each other out, and both parties have large, and quite dug-in bases – and neither have a base that alone gets them to 50% + 1. Winning Florida (or losing it) is about managing the margins throughout Florida.

16 Democratic representatives signed a letter opposing Nancy Pelosi for House speaker … but she still has no announced challenger

… Pelosi could lose as many as 15 Democratic votes when she stands for election as speaker on Jan. 3. One of the 16 signers, Ben McAdams (Utah), is now trailing Rep. Mia Love (R-Utah) and might never cast a speaker vote.

Not signing the letter is Rep. Marcia L. Fudge (D-Ohio), who has publicly opposed Pelosi and is now mulling a run against her. Fudge said Friday she would not make a final decision on whether to run until next week at the earliest.

Another five Democrats — Rep. Conor Lamb (Pa.) and Reps.-elect Jason Crow (Colo.), Jared Golden (Maine), Mikie Sherrill (N.J.) and Abigail Spanberger (Va.) — have made firm statements saying they would not vote for Pelosi but did not sign the letter.

stacey abrams and andrew gillum both conceded their elections this weekend to their republican opponents after protracted post-election battle. realistically, did either of them have any other option but to call it quits?

Zak Cheney-Rice11:47 AM

I think with Gillum the outcome was more or less decided on election night. His race was always more of a long shot than Bill Nelson’s reelection bid — the other high-profile Florida contest that dragged on into last week — and was never as close as that one. But I think it’s important to note that Abrams was pretty intentional about not conceding, in the traditional sense. She basically said, in so many words, that Kemp’s victory would have to stand because she saw no other available legal recourse available. I think she knew her options included dragging this out longer, but also knew that, legally, there wasn’t much she could do to alter the outcome.

But she has said she will continue to pursue issues around election integrity in Georgia, and I think that will include several (more) legal challenges to Kemp’s win, or at least to the mechanisms that facilitated it

Benjamin Hart11:48 AM

yes, she did not praise kemp, and called his win “legal” but refused to say that he was “legitimate” when asked by jake tapper

Zak Cheney-Rice11:52 AM

Yeah the question of legitimacy seems to be a sticking point for a lot of folks. There’s a Slate piece (https://slate.com/news-and-politics/2018/11/georgia-stacey-abrams-brian-kemp-election-not-stolen.html) circulating today arguing that we shouldn’t describe the Georgia election as “stolen,” and the first reason listed is because it could lead more and more people to see American elections as illegitimate. But I think the cat is pretty far out the bag on that one. He’s out and running down the street. I live in Atlanta and there are piles of little cards littering the streets around Piedmont Park (the city’s Central Park equivalent) that read, “Stolen Votes.” There are many, many people who believe this election was ill-gotten. So yeah, I think it is fair to say this wasn’t a legitimate win by plenty of metrics.

I’m not sure what group — activist, political, or otherwise — created the cards, to be clear. But it expresses a widely held sentiment.

Benjamin Hart11:57 AM

yeah, I have to say I’ve been on the other side on that debate – while I think kemp is a dirty character and absolutely employed the underhanded tactics we’ve all heard about, “stolen” struck me as a rhetorical bridge too far, for the reasons that a) it’s an escalation that I’m not sure is useful in the wider context of institutional delegitimization that republicans are pushing and b) we don’t actually KNOW if kemp’s actions swung the election, though we can suspect they did. I’m interested to hear you say otherwise, though.

Zak Cheney-Rice12:07 PM

I think it’s a useful and accurate frame, but it definitely has a veneer of plausible deniability because so much of what goes into “stealing” these elections takes place long before election day. Brian Kemp can always point to the fact that he’s acting well within the law, but it’s important to note these are laws he and/or his party created, likely for this very purpose. If you disenfranchise more than a million people — often for quibbling bureaucratic irregularities — and do so in a way that pretty transparently targets those whose lives are already beset by instability and unpredictability around housing, transportation, and employment, you are essentially creating the electorate you want. In Republicans’ case, that electorate is one skewed toward maintaining white, and conservative, power, at the expense of black voters, young voters, and poor voters (all of which often overlap). So the question of “theft,” it seems to me, is purely rhetorical. In our technical, traditional understanding of elections, we would not necessarily describe elections that took place in the Jim Crow South as “stolen.” But if roughly half of the Jim Crow South’s electorate is either barred from voting outright or forced to navigate an insane labyrinth of inconveniences, barriers, and sometimes outright violence to cast their ballots, it’s a stretch to describe that as legitimate, either.

That is, of course, a matter of differing scale. But it doesn’t take much to tip an election like Kemp-Abrams.

Also, it’s not our job as voters to keep falsely believing our elections are “legitimate” when clearly, in several key ways, the evidence suggests otherwise.

That distinction is earned.

Benjamin Hart12:12 PM

all good and useful points. but I do think the phraseology matters. would you say that the florida election was stolen because of the state’s disenfranchisement of felons?

Zak Cheney-Rice12:24 PM

It does matter, I think, but I haven’t found any of the arguments that dismiss such phrasing as extreme, or bemoan how it sows mistrust in our systems, to be especially convincing. I do believe that locking up black people at disproportionate rates, then ensuring they cannot vote even after they’ve done time, is doing the same work that racist voter suppression does by all the means listed above. It is stealing their right to vote, plain and simple. I think we can have a nuanced discussion about whether that means elections are being “stolen” outright or not (I tend to lean toward yes) but at the end of the day I think the more pressing issue is that we are building our democracy by ensuring people who should be able to vote cannot, and that we perhaps need more urgent language to describe the actual stakes there.

The California union that provided major funding for successful ballot campaigns to expand Medicaid in three red states this year is already looking for where to strike next to expand Obamacare coverage in the Donald Trump era.

Leaders of SEIU-United Healthcare Workers West declined to identify which states they might target in 2020. But the six remaining states where Medicaid could be expanded through the ballot are on the group’s radar: Florida, Mississippi, Missouri, Oklahoma, South Dakota and Wyoming.

NEW: CNN asks court for an emergency hearing Monday afternoon, as the White House still plans to boot CNN correspondent Jim Acosta, despite court order that reinstated the journalist. https://t.co/vrmtazbgcI